Businesses and individuals across the West Midlands could unwittingly face a ‘financial nightmare’ if the fast-approaching tax return deadline of 31 October is missed, one of the region’s leading tax experts has claimed.
The alarm comes from tax specialist Ross Tracey who is concerned thousands of people across the West Midlands could fall foul HMRC’s new penalty framework if they fail to prepare their paper self-assessments on time.
Mr Tracey, tax and trust manager at Midland law firm MFG Solicitors, said; “Wednesday 31 October is etched in many people’s minds as the final date for their paper tax returns but as always, people are waiting until the last minute to sort what can be a mountain of paperwork.
“First and foremost people intending to make the autumn paper return deadline must realise HMRC’s new fixed penalty scheme leaves no margin for error. Fines work on a sliding scale which means that missing the deadline by a single day will now see people or businesses facing a £100 fine and the longer the delay, the more surcharges and arrears there is to pay.
“Although changes to the penalty system were announced last year many overlooked the information or simply put it to the back of their minds. That’s a move which may cost people dearly so unless they get their paperwork together promptly and efficiently, they may well be forced to pay fines which stretch into thousands of pounds and have the headache of an unwanted HMRC investigation.”
Mr Tracey said that after three months of a paper tax return being overdue the fine is £10 per day. If the situation reaches six months a further £300, or five per cent of the tax due, will be required – or at worst, people may be asked to pay 100 per cent of the tax owed.
He added: “As a firm we don’t want to see anyone get into problems over the coming months. There are people who choose to take the online option and fill in their self-assessments for the 31st January deadline, but there are others who don’t have that flexibility. The best advice is to set time aside to gather all information, documents and other paperwork and if in doubt, people and especially small businesses should seek professional advice to guide them through what has turned into a potential financial nightmare.”
Mr Tracey’s comments follow a recent study by international law firm Pinsent Masons. Their research estimated the total value of penalties paid to HMRC by the end of July 2012 was around £950m – compared to £250m for the same period in 2011.
Full online self-assessment information is available on the official HMRC website which is available through www.hmrc.gov.uk